Dec 07, 2018
Cadwalader represented The Alternative Reference Rates Committee (ARRC) in preparing the just-released consultations on U.S. dollar (USD) LIBOR fallback contract language for bilateral business loans and securitizations. These consultations are now open for public feedback.
The ARRC consultations outline draft language for new contracts that reference LIBOR so as to ensure these contracts will continue to be effective in the event that LIBOR is no longer usable.
Cadwalader’s LIBOR Preparedness Team is headed by partner Lary Stromfeld. Partners David Burkholder and David Gingold worked on the securitization consultation and partner Jeff Nagle worked on the bilateral loans consultation.
Cadwalader was selected by ARRC to assist in guiding the post-LIBOR financial world in developing best practices for fallback language across all cash products. LIBOR, the London Interbank Offered Rate, is one of several “benchmark” interest rates used in over $400 trillion of financial transactions around the world, including derivatives, corporate and consumer loans, bonds and securitizations. Since 2012 global regulators have been concerned about the integrity of these benchmark rates. In the past year, global regulators and market participants have stepped up efforts to transition away from these benchmark rates and to replace them with new rates that are more liquid and transparent. The effort to replace LIBOR, which is generally expected to cease publication by the end of 2021, is being coordinated in the US by the Federal Reserve.
The Bank of England has initiated a review of its own exposure to LIBOR,
Scott Cammarn, Jonathan Watkins, Mark Chorazak, Aaron Lang
On 7 June 2019, Regulation (EU) 2019/876 (CRR II) was published in the Official Journal of the EU.